Supreme Court Appoints Justice Ajay Rastogi as Sole Arbitrator After Justice R. Banumathi’s Recusal

July 31, 2026 : Former Supreme Court judge Justice Ajay Rastogi has been appointed as the substitute sole arbitrator by the Supreme Court to continue arbitration proceedings between DMI Finance Private Limited and RCC Infraventures Limited after former Supreme Court judge Justice R. Banumathi recused herself from the matter.

A Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana passed the order on Friday while declining to examine the circumstances that led to Justice Banumathi’s recusal. Although the Bench expressed regret over the manner in which the situation unfolded, it observed that someone had effectively manipulated the recusal process. The Court remarked that the issue could perhaps have been avoided had it been brought to its notice at the appropriate stage, but decided not to pursue the matter further.

The dispute reached the Supreme Court after a witness allegedly walked out of the arbitral proceedings during cross-examination without signing his recorded deposition. The witness later disputed the contents of the statement, leading to complications in the arbitration and Justice Banumathi’s subsequent recusal.

Appearing for DMI Finance, Senior Advocate Vikas Singh argued that a witness should not be allowed to repudiate a statement recorded before an arbitral tribunal merely by refusing to sign it. Referring to Section 27(5) of the Arbitration and Conciliation Act, 1996, he submitted that the evidentiary value of the unsigned deposition and the witness’s conduct should be decided by the substitute arbitrator.

The Supreme Court accepted this submission and clarified that all issues relating to the witness’s testimony, including whether the unsigned deposition could be relied upon and whether any action should be initiated against the witness, would remain open for determination by the newly appointed arbitrator. Singh also clarified that he was not seeking any ruling from the Supreme Court on those issues.

The Bench noted that eight days of cross-examination of the claimant’s first witness had already been completed before the proceedings were interrupted. It directed that the arbitration should continue from the same stage, leaving it to Justice Ajay Rastogi to decide the future course of the proceedings. Counsel informed the Court that only a small portion of the cross-examination remained.

The Court was also informed that an application under Section 29A of the Arbitration and Conciliation Act seeking an extension of the arbitral mandate is pending before the Delhi High Court because of the proceedings before the Supreme Court.

During the hearing, the names of several retired judges were proposed as substitute arbitrators. Ultimately, both parties expressed no objection to the appointment of Justice Ajay Rastogi, following which the Bench formally appointed him as the sole arbitrator.

The Supreme Court also rejected a request to convert the proceedings into a three-member arbitral tribunal, observing that the Delhi High Court had originally appointed Justice R. Banumathi as the sole arbitrator with the consent of both parties.

Before disposing of the matter, the Bench directed both parties to fully cooperate with Justice Ajay Rastogi and ensure that no similar controversy arises during the continuation of the arbitration, which will resume from the stage where it had stopped following Justice Banumathi’s recusal.